By this time last year many of us had hunkered down in earnest.
From a note to clients by analyst Amit Daryanani that landed on my desktop Monday:
All You Need to Know: App Store growth slowed in April as it begins to come up against some tough comps after 6 straight quarters of 30%+ growth. We estimate total App Store developer revenue grew to ~$4.8bn in April; up 18% Y/Y (vs. +31% in March, +31% in February).
The deceleration was primarily driven by a slowdown in gaming revenue as we lap the benefits from last year’s COVID shutdowns. Street models are calling for Services revenue growth to decelerate to 23% y/y in the June-qtr, down from 27% in the Mar-qtr. This deceleration looks appropriate as App Store revenue will likely be high teens to low 20s growth.
The App Store is facing difficult comps after reporting +33% growth in June-20. Apple care is another component of the Services business that will likely slow down as it tends to be relatively correlated to iPhone sales. From a geographic perspective, Japan (+9%) and Taiwan (+10%) saw the largest deceleration, falling from growth rates of 29% and 20%, respectively. Growth in the US and China outperformed the broader store with revenue +25%.
Net/Net: Services growth looks set to decelerate as we come up against some difficult comps. Longer-term, we remain confident in our call for high-teens annual services growth.
Maintain Outperform rating and $175 target.
My take: Comps — damned if you do and damned if you don’t.